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Between May and November, the average interest collected on a five-year term deposit with one of the big banks shrank more than 1 per cent - from 5.65 per cent to 4.60 per cent. Despite this, the average interest collected on home loans over the same period fell more conservatively, by just 0.78 per cent.

"The more they pass on to deposit holders and the less they pass on to home loan customers, the more they can ease their costs," he said.

The federal Treasurer, Wayne Swan, said banks did not have any justification for holding back interest rate cuts. He said his government's reforms meant it was easier for customers to switch banks if they were unhappy.

Mr Swan also heaped praise on online bank ING Direct for passing on the RBA's cut in full while criticising the big banks for failing to do the same.

Financial products comparison company RateCity said the slower lending market for home loans meant customer attention was even more important for lenders. Borrowers could be receiving more discounts above an average of 0.8 percentage points that they were already receiving off their standard variable rate, spokeswoman Michelle Hutchinson said.

"If you call up and ask a lender to match a home loan that you saw and you tell them you are thinking about switching or if you call their bluff, the worst they could say is 'no'. You could end up with even a 10 basis point discount without having to do any more paperwork or fees," Ms Hutchison said. "We are seeing a lot of lenders willingly offering to renegotiate with individual borrowers to keep them as a customer."